Many organizations rely on computing systems, such as enterprise resource planning systems, to manage risk. Different accounting and legal requirements may require organizations to keep track of and account for an organization's financial exposure to various risks, including, for example, foreign exchange rate risks, credit risks, interest risks, and commodity price risks. For example, in the metals, mining, and oil industries different pricing formulas may be used to determine the price of delivered goods. These pricing formulas may, for example, average the price of a commodity at a futures exchange over a predetermined time period to calculate a final price of the delivered commodity.
While existing exposure management computing systems were able to calculate an organization's exposure to commodities on a fixed price basis, it was difficult and cumbersome to configure these systems to efficiently account for variable or floating price exposures as they may occur in sales and purchase orders, and then adjust the exposures as circumstances change, such as when commodities are ordered versus shipped versus delivered versus paid for. Additionally, existing exposure management systems lacked an intuitive methodology to analyze exposure information at an atomic level and then restructure the atomic level exposures into aggregated exposure positions needed to satisfy different hedging, accounting, and/or legal requirements. The lack of such an intuitive methodology has made it difficult for organizations to efficiently restructure price exposures into exposure positions.
There is a need for an intuitive methodology in systems and processes that may enable organizations to quickly and efficiently calculate an initial exposure and then later adjust exposure positions as circumstances change, while also enabling an intuitive and efficient restructuring of price exposures into exposure positions satisfying specific operative needs, such as the need to minimize losses due to high market volatility or to satisfy hedging, accounting, or legal requirements.